Cigna Agrees to Buy Express Scripts for More Than $50 Billion

March 8th, 2018

And the consolidation continues...

Cigna Agrees to Buy Express Scripts for More Than $50 Billion - WSJ

Health insurer Cigna Corp. CI -10.74% plans to buy Express Scripts Holding Co. ESRX +9.78% in a cash-and-stock deal worth $52 billion, excluding debt, that the companies say will expand their health care offerings and help them control costs.

Under the terms of the agreement, Express Scripts shareholders will receive $48.75 in cash and 0.2434 shares in the combined company for each Express Scripts share. The consideration amounts to about $96.03 for each Express Scripts share, a 31% premium over Express Scripts’ Wednesday closing price of $73.42.

The deal has a total transaction value of $67 billion, which includes Cigna’s assumption of $15 billion of Express Scripts’ debt.

The Wall Street Journal reported late Wednesday night the two companies were nearing a deal and could announce it as soon as Thursday.

The combination is the latest in a flurry of proposed tie-ups in the rapidly changing health-care-services business. St. Louis-based Express Scripts is a pharmacy-benefit manager, or PBM. Such companies serve as middlemen that help negotiate discounts with drugmakers.

“When we think about Express Scripts, it has PBM capabilities, but it has 27,000 individuals and a significant number of consumer touchpoints around health and well being,” Cigna CEO David Cordani said in an interview Thursday morning. “It expands our service portfolio beyond that of a PBM.”

Cigna began exploring the tie-up seriously late last year, Mr. Cordani said. One of the drivers for the deal is its ability to broaden Cigna’s offerings and reach. “Having the capabilities to serve an individual whether they are healthy, healthy at risk, chronic or acute is important,” he said.

Once the deal closes, Cigna shareholders will own about 64% of the combined company, which will retain Cigna’s name, and Express Scripts shareholders will own about 36%.

Express Scripts shares rose 12% recently, while Cigna shares were down 9.3%.